Credit Cards in China

(Greenwich, 9/27/2006) As I have written before, China is working toward fully opening its capital markets to foreign firms by the end of this year in accord with the WTO agreement. US firms are lining up at the border like the Oklahoma land rush to get at China’s huge, growing market.

Today, most transactions in China are handled using cash, sometimes thick stacks of 100 RMB notes. There is a huge opportunity to bring credit cards to China. There is also a lot of work to do to create the necessary credit history data bases and risk measurement and management systems. There will also be a period during which China’s consumers will learn how to manage credit.

Thought you would like to see the charming email I received from a young woman in China on the subject.

Dr. Rutledge, it’s my first time to leave comments on your blog, although I have read them several times! xixi, Maybe as a young greenhand girl on work, it’s a little difficult to understand all of the economic thing, but I’m much interested. I particularly like your part on China. After reading, I can feel a kind of confidence for my motherland’s future development, thank you for your analysis and support. Yeah, there always exist changes in chinese daily life. For example, recently I found so many banks began the campaign of sending credit cards toward the public. and the requirement for application is not as complicated and high as before. Even the fresh worker like me can have one or more. I wonder if it is cost-effective for me to have one and use it in my daily expense. hehe. It’s pleasure to taik with you.

It is young people like this that are going to drive China’s growth over the coming decades.

I am working on two aspects of the credit problem. With Hunan University I will be working on credit histories. With Haidian I am working to attract financial talent to help train and grow financial companies. This is going to be an exciting story for many years.

0 Comments

You are spot-on about the opportunities for credit card companies in China. It's interesting to watch the whole credit industry develop over there; but I'm sure it would be much more exciting to actually be involved with it like you are!

Bill

2. Significant errors in both technology and logic with respect to the credit reporting system implemented by the People's Bank of China which, if known and exploited, could lead to even more significant losses for credit card issuers than those they already suffer.

Any foreign architects of the PBOC credit reporting system should be ashamed of themselves.

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